The one thing I remember from Professor Rossell's managerial accounting class in Business School: There is only one response to any financial question:
"Who wants to know?"
For example, "How much did you earn?"
To the stockholders: "A lot."
To the employees: "A little."
To the IRS: "Nothing."
I imagine Professor Rossell's response to "Is Facebook overvalued?" would be, "To whom?"
In the short term, the price is determined by the dumbest person with access to a checkbook. In the long term, the price is determined by smart people, because the dumb people are broke.
It's actually a well known economic phenomenon when there is an auction situation and for sure FB managed to organized an auction: the "winner curse"...
"Who wants to know?"
For example, "How much did you earn?"
To the stockholders: "A lot."
To the employees: "A little."
To the IRS: "Nothing."
I imagine Professor Rossell's response to "Is Facebook overvalued?" would be, "To whom?"